Talbots Inc., a Hingham-based apparel retailer, said today that it has completed a crucial part of its reorganization plan - aimed at buying out its largest shareholder - by completing a warrants exchange.
Talbots struck a deal to acquire BPW Acquisition Corp., a blank-check company with $350 million in cash it raised from an IPO in February 2006, so it could use the cash to buy itself out from Japanese retail comapny Aeon (U.S.A.) Inc., which holds a 54 percent stake in the company. (To read a Globe story about the company's reorganization plan, please click here.)
Talbots offered to acquire BPW by an exchange of BPW's stock and warrants with Talbots stock and warrants. In February, 91 percent of BPW shareholders approved the deal. The stock and warrants exchange was due to close March 26, but one warrant holder, Pentwater Capital Management, which owns 9 percent of BPW's warrants, held out, said FBR Capital Markets analyst Adrienne Tennant.
Talbots extended the offer deadline each business day until Wednesday, when it had the required amount of stock and warrants tendered to go through with the deal. The deal should close by the end of the week, Tennant said, and Talbots can buy back its stake from Aeon.
It is also getting a new credit facility as part of the deal. It will end up with about $160 million in debt when it had $491 million before the deal.
"At last!," Tennant wrote in a note to investors. "We commend and congratulate all parties on navigating through this complex deal, which we believe adds tremendous value to both companies."
Talbots has struggled with falling sales and instituted a turnaround plan to help results. In December Talbots reported it returned to a fiscal third-quarter profit on cost-cutting. Revenue fell 14 percent to $308.9 million. The company is scheduled to report fourth quarter results on April 13. Aeon Co. owns supermarkets, drug stores, and department stores as well as financial services and food processing companies, mostly in Japan.
Talbots shares rose 58 cents, or 4.4 percent, to $13.79 during midday trading.
The stock has traded between $1.86 and $14.30 during the past 52 weeks.
(A Talbots store front is shown in a Bloomberg News file photo.)